UBS has released a research report lowering its price target on CATL (03750) from HK$820 to HK$730, while maintaining its "Buy" rating. The bank also cut its net profit forecasts for the company for 2026 to 2028 by 11% to 14%, bringing the adjusted forecast range to RMB 90 billion to RMB 131 billion.

CATL's third-quarter net profit came in at RMB 21.2 billion, up 15% year-on-year but down 6% quarter-on-quarter, missing buy-side expectations by roughly 10%. For the first nine months of 2026, net profit reached RMB 64.5 billion, achieving only 62% to 67% of full-year market consensus and the bank's forecast, which could prompt the market to lower its full-year consensus estimates.

Excluding non-recurring items, the company's third-quarter net profit was RMB 18.9 billion, up 15% year-on-year but down 10% quarter-on-quarter. During the period, the company's battery sales exceeded 260GWh, with energy storage system (ESS) batteries accounting for about 25% and electric vehicle batteries making up roughly 75%.

The bank noted that on this basis, the company's unit profit fell to RMB 82 per kilowatt-hour, a record low, mainly due to quarterly product mix fluctuations, an increase in low-value-added projects, the consumption tax imposed on lithium-ion batteries starting September 1, and a reduction in the export value-added tax rebate rate from 9% to 6%.

Despite near-term earnings pressure, management remains confident in the industry's growth outlook of 20% to 30% for 2027.